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Published: September 24,2001

Businesses around Jackson — and Mississippi — began flying flags and posting patriotic messages on signs after the Sept. 11 terrorist attacks. Here are a few photographs from north Jackson.

The stock market last week got off to an emotional start, following two minutes of silence and the singing of “God Bless America” on the floor of the New York Stock Exchange.

Prior to the terrorist attacks on the World Trade Center towers and the Pentagon, stocks were already down and sinking even further into a deep abyss. Now, the financial markets are open once again. How vulnerable they are remains unclear.

For the eighth time this year, the Federal Reserve Bank cut short-term interest rates. The reduction by half a percentage point was a pleasant surprise for investors. Central banks in Europe and Canada also cut rates.

But while lower interest rates was welcome news for all in the financial district, there was little that could be done for airline, travel and insurance stocks, which were hardest hit. Airlines are issuing massive layoffs, which may result from a sharp reduction in flights. Citigroup and American Express have joined a growing list of companies warning that their profits will suffer due to the terrorist attacks. Lloyd’s of London and its syndicates could face an insurance loss of $1.5 billion or more.

In the first day of trading after the terrorist attack, Monday, Sept. 17, the Dow Jones industrials dropped 684.81 points, or 7.13%, and the NASDAQ tumbled 115.82, or 6.83%. Blue chips’ fall was the worst-ever in point terms, but ranked only 14 among percentage declines.

It was a day of heavy trading — the NYSE handed a record volume of 2.37 billion shares. The volume was expected and feared at the same time — stockholders and brokers hoped the computer systems in the financial district could handle the volume, which they did.

While those in the financial district in metro Jackson needed no facemasks in order to breathe in their office spaces or on the streets outside, work was different nonetheless.

J. Harmon Bays, financial adviser and sales manager at Legg Mason Wood Walker Inc., spent the day after the terrorist attacks talking to clients about how markets reacted after past disasters. He said while the disasters on Sept. 11 were unprecedented, the stock market’s reaction to prior disasters may provide a context for expectations.

In 1941, after the bombing of Pearl Harbor, the Dow Jones industrials declined approximately 7% in the ensuing month and eventually bottomed five months later. The Dow was 15% higher one year after the surprise bombing.

Following the assassination of President John F. Kennedy in November 1963, the Dow declined 3% before recovering and finishing higher one month later.

During the Stock Market Crash in October 1987, the Dow declined 23% in one day, and re-tested lows the following December before a multi-year recovery.

When the threat of the Gulf War first emerged, markets reacted negatively, falling more than 6% leading up to Operation Desert Storm. However, once the conflict was engaged, the markets rallied sharply, closing up 4% in a week and 17% over the next month.

“My advice for investors is to review their financial objectives, asset allocation and risk tolerance in light of the extraordinary times,” Bays said. “The great lesson of the past is that stocks recover from periods of war, presidential assassination and other calamities that occur in the course of human events. I expect them to do so again.”

Alan Tye, portfolio manager at Vector Money Management, said he suspected there would be some weakness in the economy following the attacks, but took encouragement with a lot of things the central banks globally have done to ensure there would be stable and operating markets.

“This has given the central banks across the globe (a reason) to get together and deal with the economic weakness we’ve been facing over the past 18 months,” Tye said. “At the same time, the economic reality is that finally we’re getting some cohesive action on a global basis to restart the stimulus that would spark the local economy.”

The professional staff of Pinnacle Trust Company in Jackson issued letters and newsletters and communicated with clients continuously after the attacks on the World Trade Center towers and on the Pentagon.

One such message they sent out, which closed with “God Bless America,” read, “We are confident that just as America recovered from these past tragedies to continued greatness, we will once again establish ourselves as the greatest nation with the strongest economy on earth. There will be a time of grieving, and yes, a time of economic uncertainty. Nevertheless, those who resist the ‘retreat’ mentality and stay the course financially, we believe will be the ones who recover the quickest once the economy rebounds.”

Stacey L. Wall, CEO of Pinnacle Trust Company, said no one in his company was selling the day the markets reopened.

“We believe that the long-term nature of the economy is good and we didn’t want to participate in any type of panic,” Wall said.

Wall said he was pleased to see that while the market was down, there was no panic selling taking place. “I think it was a very controlled drop and probably something we were going to see anyway even without this disaster,” Wall said. “Frankly, some of the numbers we saw come out last week led us to believe that probably the economy had slipped into a recession just prior to the attack.”

Among some of the changes Wall expects to see in the market in the near future include a huge increase of government spending on defense, as well as companies moving from the practice of “just in time” to “just in case” inventories. Wall also expects the market to recover, albeit slowly.

“We’ve been saying we would recover next year,” Wall said. “Now it’s a little clearer where the recovery will come from.”

Wall said before the Sept. 11 terrorist attacks, it was thought that there would be a gradual decline and bottoming out before a recovery took place next year. Now it is thought that there will be a harp cutback in spending in the third and fourth quarters, followed by a sharp rebound next year.

“I think there was a certain amount of patriotism yesterday (Sept. 17) that prevented some panic selling but I think it’s going to be tested because it’s going to be hard for us to see some clear victories in this war,” Wall said. “I heard someone on the television the other day say ‘how do we know when we’ve won the war?’ It’s going to require patience by the American people and by investors. But we’re optimistic for the long-term.”

Wall said investors are in for a rough few months following the attacks.

“We’re probably going to see some choppy markets in here, but there is nothing fundamentally wrong with the American economy,” he said. “It just had to take a breather. But the fundamentals are still in place.”

Tim Medley, president of Medley & Brown in Jackson, was in London when the attacks occurred and only just returned to the U.S. Sept. 15. He said his company did not sell anything Sept. 17 either.

“We bought in very significant terms yesterday,” Medley said. “The market was down and we saw it as an opportunity to establish positions in equities.”

Medley said his company was buying things up until 3 p.m.

“In fact,” he said, “our operations people were giving us hell.”

“There’s an old saying that the way to make money is to be fully invested at the bottom and I believe that,” Medley said. “I couldn’t imagine why anyone would have wanted to sell yesterday.”

Like the bulk of investors, Medley believes business will pick up next year and earnings will get better.

“Ultimately the price of securities depends on the earnings, and earnings have been hit recently. But at some point they’ll begin to come back and comp

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